IN DEPTH
Opinion VAT on e-books
Stephen Lotinga
A recent EU ruling could have huge ramifications for the digital market. Should the UK government follow its continental neighbours in acting fast?
From zero to hero I
zero-rating digital publications. It has been an extremely long time in the offing, granted, but the EU has demon- strated that it is forward-thinking on this issue and has at last acted accordingly.
Other EU countries have indicated they will quickly get on with correcting this bizarre discrepancy, whereby 20% VAT is charged on digital publications—including e-books, audiobooks and digital journals—as opposed to 0% on their print equivalent. This digital penalt impacts millions of consumers and is stalling the growth of the publishing sector. Fort-one per cent of UK adults bought, downloaded, borrowed or were giſted an e-book in 2016, and audiobooks are currently the fastest-growing digital book format.
Do the right thing The UK now risks lagging way behind its European coun- terparts if it doesn’t take the earliest opportunit to act. In or out of Europe, it’s the right thing to do. We should not be taxing reading, learning and knowledge in any format. The UK decided in 1973 that books were one of the few
items that should remain exempt from VAT. The govern- ment of the time took the decision in recognition of the detrimental effect any tax on reading would have on access to knowledge, and on the basis that the free exchange of ideas is fundamental to a learned and democratic societ. This principle is as relevant today as it was 45 years ago. Nielsen data shows that most of those buying e-books are women (64%), and digital readers are fairly evenly
TheBookseller.com
spread across the age-groups, with 14% sold to those aged 13–24 and 17% to those aged 65–84. There are 360,000 registered blind or partially sighted people in the UK, many of whom benefit from non-print content, as well as a huge number of students and academics who use digital journals. The costs to the UK treasury of zero-rating digital publi- cations are likely to be comparatively modest—and offset to some extent by the current public-sector VAT spend on e-publications, as well as the compliance enforcement costs to HMRC associated with operating two rates of tax. The change would hugely benefit UK readers and give reassurance and certaint to digital content businesses.
t’s a longstanding trope that the cogs of EU politics turn very slowly—one that is oſten used (and abused) in UK political discourse, with proponents of Brexit positioning it as a solution.
It is therefore ironic that events in Brussels a couple of weeks ago—when a key vote at the Economic & Financial Affairs Council finally allowed member states the freedom to set their own VAT regimes—mean the UK may now see others surge ahead on the issue of
Zero-rating e-publications would end an unfair tax that is a barrier to digital growth and provides a brake on learning
ZERO-RATING E-BOOKS WOULD ENABLE
DIGITAL PROVIDERS TO THRIVE
It would also send a clear message that the government is serious about its commitment to, in its own words, “make Britain the best place in the world to start and grow a digital business”.
Axe to grind The UK’s great authors would also benefit from zero- rating, as significant market expansion would be an expected outcome. More readers, more books sold, and a wider breadth of authors able to get their products to market. Zero-rating e-publications would end an unfair tax that is a barrier to digital growth and provides a brake on learning. It will provide benefits to digital readers of all kinds, including students, those with disabilities and a range of public sector workers who rely on having access to digital content to do their jobs—from teachers, to nurses, doctors and members of the armed forces. The PA will shortly be launching a full campaign, Axe
Stephen Lotinga is the chief executive of the UK Publishers Association
the Reading Tax, which we will use as a vehicle to escalate the case for zero-rating all digital publications. The campaign centres on three themes: increasing fairness, stimulating growth, and modernising the tax system. We have writen to Chancellor Philip Hammond MP ahead of the budget at the end of October to raise our concerns, and we are also asking UK publishers to write direct. Many people from all industries will, of course, be pushing for myriad causes, but we stand a good chance of persuading the government if the publishing industry comes together to amplify the case for axeing the reading tax.
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